CIUDAD JUAREZ, MEXICO — MIDDAY in bustling Juarez. Shoppers crowd the sidewalks. Merchants stand in doorways, hawking their wares. Cars clog the streets. Teen-age couples walk arm in arm. Lively music spills out of restaurants and discos. Mexico, colorful and gay, remains a favorite vacation spot for Americans. But this country has a darker, seamier side that remains hidden from visitors. Deeply rooted problems - political, economic, social - are driving millions of its people illegally across the border into the United States.
Economic difficulties here are so serious that some experts consider Mexico a ticking time bomb. They say that in another severe downturn, the country could erupt, and endanger US security.
A number of analysts warn that Mexico, the neglected stepchild of US foreign policy, urgently needs attention in Washington.
Robert Pastor, an Emory University specialist on Mexico, explains: ``Except for the Soviet Union, for strategic reasons, and Japan, for economic reasons, Mexico is our most important relationship, and our most difficult.''
Mexico's problems are interrelated - widespread poverty, an exploding population, severe pollution, a seven-year economic decline, inefficient industries, corruption, lack of investment capital, huge debt. Together they threaten Mexico - and the US.
``If there is a problem in Mexico, there is probably no problem anywhere else in the world which will have more of an effect on the United States,'' Dr. Pastor says.
The professor wrote with Jorge Castaneda, a Mexican scholar, the new book, ``Limits to Friendship: The United States and Mexico.''
George Grayson, an expert on Mexico at the College of William and Mary in Williamsburg, Va., says this country's most immediate problem is jobs. At least half the workers in Mexico are either unemployed, or underemployed.
Mexico's expanding population requires 1 million new jobs a year, Dr. Grayson says. Yet even in a good year, only 100,000 to 200,000 new jobs become available. That means at least 800,000 new workers each year are without jobs - and often without hope - if they stay in Mexico.
Many don't. Millions of young people already have fled to the US. Here along the border, US officials report a sharp rise in the number of illegal entries.
Pastor says even Mexicans who have jobs here often migrate to the US. A typical Mexican worker, even when exploited in the US, can earn 10 to 15 times what a similar job would pay in Mexico.
``The US is a very powerful magnet,'' Pastor says.
These vast differences in wealth and opportunity between the US and Mexico fuel fears among some analysts, including US government experts. They warn that Mexico's problems could spill like a sudden torrent into the Southwestern US.
William Colby, former head of the Central Intelligence Agency, once shocked Mexico by calling that nation's population explosion ``the most obvious threat'' to the US. If population growth remains unabated in Mexico, he warned, the number of illegal immigrants could rise to 20 million by the year 2000, and the US Border Patrol ``will not have enough bullets to stop them.''
Pastor calls such comments ``unfortunate.'' But he admits Mr. Colby's words have ``power.'' The threat of massive, uncontrolled immigration is very real:
``If there is instability in Mexico, there would be no way that the United States could effectively contain it. We would immediately share the consequences.''
Despite its problems, Grayson sees encouraging signs south of the border. He sees indications that the economy, political system, and media are being liberalized and made more competitive.
Grayson says the expansion of free enterprise, which now seems to be happening, could speed reform of the nation's political system, which has been dominated for decades by a single party.
Mexico's recent economic troubles, which began in 1981, are primarily blamed for the exodus of millions of its people. At the beginning of this decade, Mexico was bubbling with new oil discoveries and petroleum prices were rising. Suddenly, prices plunged. The country's oil earnings fell by one-third. Prices dropped again in the mid-1980s - leaving Mexico with a huge international debt.
Grayson, who lectures at the State Department's Foreign Service Institute, says the decline in oil earnings was just part of the problem: ``The broader problem was that it was a highly protected economy, highly subsidized, with an inefficient state sector. A lot of state companies were running in the red and still do.''
Grayson says Mexico had thrown up a wall of economic protectionism. Its companies were guarded from outside competition. The result: poor products and high prices.
The combination of falling oil prices and poor economic policy was devastating. In the past seven years, Mexico's economic output slipped backward 17 percent - just as millions of teenagers reached working age.
The immense foreign debt built up before the oil bust requires steep interest payments. That drains Mexico of capital needed for industrial expansion. Businessmen and wealthy citizens also seek safer havens outside Mexico for their cash.
``Altogether, Mexico has exported over $107 billion in capital to the United States and the rest of the industrialized world since 1982,'' Pastor says. That is continuing - at the rate of $12 billion to $15 billion a year, largely because of debt payments.
What can be done? Some have suggested a Marshall Plan for Mexico, as the US helped Europe after World War II. But both Grayson and Pastor say that would be unwise.
What's really needed is help for Mexico on its debt, Pastor says. Reduced debt payments would stanch the drain of capital, and leave more money for new jobs.
Grayson says Mexico also needs labor-intensive ventures to improve its infrastructure - roads, ports, public utilities, irrigation systems. Such pick-and-shovel projects would quickly create jobs.
The outcome here is important for the US, Pastor says.
``It's like your neighbor's house. If your neighbor takes good care of his house, the value of your house increases. If his house deteriorates, the value of your house declines.''
The 1980s should have shown the US just how important Mexico was, Pastor says. When oil prices fell, ``we lost half our exports to Mexico in a single year. During the debt crisis, we've lost the equivalent of $45 billion worth of trade with Mexico. Those are millions of US jobs lost.''
As Mexico's population grows, the importance of this country's future will become even greater to the US, he notes.
One in a series of articles about US border problems.